The Queen’s Health Systems is in talks with Kuakini Health System on a possible acquisition of the Liliha hospital.

The purchase of the much smaller Kuakini by Queen’s, one of the state’s largest health care providers, would be in keeping with a recent trend of independent hospitals being absorbed into larger organizations.

The acquisition would help Kuakini Medical Center, founded in 1900 to serve Japanese immigrants, at a time when stand-alone hospitals are hurting financially.

"In planning to meet the changes in the health care environment, both health systems have begun further discussions on working together for solutions that will enhance and strengthen our delivery of services," said Queen’s spokesman Cedric Yamanaka.

Sen. Josh Green (D, Naalehu, Kailua-Kona), who is familiar with the situation, said Kuakini hospital has struggled economically for years, so a "partnership or acquisition makes a lot of sense."

"Kuakini has struggled with the same challenges that the (public hospitals under Hawaii Health Systems Corp.) have, which is their payer mix of Medicare and Medicaid patients that makes it very hard for them to earn enough money to stay open," Green said. "Kuakini’s been holding on the best they can … but there comes a point at which no one can survive without some help these days."

Art Ushijima, Queen’s president, released an internal memo to employees Wednesday notifying them of the "preliminary discussions," following calls from the Honolulu Star-Advertiser.

"Queen’s remains mindful and dedicated to our mission to provide in perpetuity quality health services to improve the well-being of Native Hawaiians and all the people of Hawaii," Ushijima said in the note. "Like Queen’s, Kuakini has a long history of providing quality health care to our community. The Queen’s Health Systems has had positive clinical relationships with Kuakini Health System for decades."

Donda Spiker, spokeswoman for Kuakini, characterized the discussions as more of a collaboration of services and programs.

"There’s no purchase or merger. That’s not what’s being talked about. It’s more talks about service or program affiliations," Spiker said. "We want to prepare ourselves or make sure we are ready to provide the best and the safest health care to the community, whether that’s partnering with some other organization so that we can combine resources and strength to offer the best to our patients. We want to make sure we are able to provide for the needs of the people."

The two hospitals already cooperate in several areas.

Queen’s and Kuakini are part owners of Diagnostic Laboratory Services Inc., which provides clinical testing services to hospitals, doctors’ offices and other health care organizations. CareResource Hawaii is a joint venture between Kuakini and Queen’s that provides home health and private duty services statewide. Both providers are also part of the Hawaii Cancer Consortium, along with Hawaii Pacific Health and the University of Hawaii John A. Burns School of Medicine and UH Cancer Center, to conduct research and offer therapeutic services to cancer patients.

Queen’s flagship Punchbowl Street campus is just over a mile away from Kuakini Medical Center on North Kuakini Street.

Queen’s has been expanding in recent years on Oahu and the neighbor islands. In January 2014, it acquired North Hawaii Community Hospital on Hawaii island and purchased the defunct Hawaii Medical Center-West in 2012. Molokai General Hospital joined Queen’s in 1987 after it accumulated "considerable debt" and needed the help of the larger system to rescue it from financial distress.

"This development is consistent with what we can expect, which is consolidation of the hospital system to streamline centralized services like administration, legal and some on-call sharing perhaps, because there’s very little room any more for redundancy," Green said.

Hawaii Pacific Health — which operates Kapiolani Medical Center for Women & Children, Pali Momi Medical Center, Straub Clinic & Hospital and Wilcox Memorial Hospital on Kauai — confirmed last month that it is exploring a purchase of all or part of the ailing Wahiawa General Hospital.

HPH also is in negotiations to assume control of three neighbor island hospitals — Maui Memorial Medical Center, Kula Hospital and Lanai Community Hospital — part of the state’s troubled public hospital system, HHSC.

Don Olden, chief executive officer of the Wahiawa facility, said smaller medical facilities across the state eventually won’t survive without partnering with one of Hawaii’s major health care systems, which include Queen’s, HPH and Kaiser Permanente Hawaii.

"You’re going to have to have a unique marketplace to be sustainable and I don’t think there are any unique marketplaces in Hawaii," Olden said. "Across the whole U.S. there’s been a real move towards building larger health care systems. They have to be restructured or the payment systems are going to have to be overhauled. It’s getting extremely difficult for them to survive without getting some type of support."